Tough Love or Unconditional Charity?

Posted: 2 Jul 2008

See all articles by Spiros Bougheas

Spiros Bougheas

University of Nottingham - School of Economics

Indraneel Dasgupta

Durham University - Department of Economics and Finance; IZA Institute of Labor Economics

Oliver Morrissey

University of Nottingham - Development Economics

Date Written: October 2007

Abstract

Charitable giving increasingly requires recipients to undertake costly prior action. A common justification is that willingness to undertake costly actions signals greater productivity from transfers. We demonstrate that, if the distribution of recipient types is unknown, recipient costs indivisible and productivity unobservable, conditional charity, once instituted, may not yield information adequate to refute its efficiency claim. Consequently, donors who inefficiently provide conditional charity will not correct themselves. Donors who wrongly provide unconditional charity may however subsequently correct themselves. This offers grounds for scepticism regarding efficiency claims for conditional charity. We also provide reasons for encouraging donor competition and indicator targeting.

Keywords: JEL classifications: F35, F34, I38, O20

Suggested Citation

Bougheas, Spiros and Dasgupta, Indraneel and Morrissey, Oliver, Tough Love or Unconditional Charity? (October 2007). Oxford Economic Papers, Vol. 59, Issue 4, pp. 561-582, 2007. Available at SSRN: https://ssrn.com/abstract=1154398 or http://dx.doi.org/10.1093/oep/gpm026

Spiros Bougheas (Contact Author)

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom

Indraneel Dasgupta

Durham University - Department of Economics and Finance ( email )

Durham, DH1 3HY
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Oliver Morrissey

University of Nottingham - Development Economics ( email )

University Park
Nottingham, NG8 1BB
United Kingdom
+44 (0)115 9515475 (Phone)
+44 (0)115 951 4159 (Fax)

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